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Consider the market for university education. At the current market equilibrium, the price of university education is $5,000 per annum, and the number of students enrolled is one million. Presently, there is a decrease in the salaries of academic staff as well as a decrease in the salaries of administrative staff ("Event #1"). At the same time, there are a growing number of high school graduates deciding that a university education is essential to securing a more progressive career ("Event #2"). Assume, for the sake of this question that university education can represented by a demand and supply diagrams.
How do these two events affect the current equilibrium? Use three diagrams to demonstrate the three possible scenarios:
a) The decrease in costs faced by the university is smaller than the increase in enrolments.
b) The decrease in costs faced by the university is the same as the increase in enrolments.
c) The decrease in costs faced by the university is greater than the increase in enrolments.
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